Congress pushes for discounts for cash payers

Visa and Mastercard earn billions through the fees they collect on merchants' credit card transactions. As part of their standard agreements, vendors are prohibited from offering a discount to customers who pay with cash.

That could change. Sen. Richard Durbin (D-Illinois) and Sen. Christopher Bond (R-Missouri) are pushing for regulation that would prohibit credit card companies from imposing these unfair and arbitrary rules on merchants which force cash customers to, in effect, subsidize the purchases of credit card users.

Retailers pushing for the chance "do not want to pay their fair share for the significant benefits they get when accepting debit and credit," Trish Wexler, a spokeswoman for industry trade group Electronic Payments Coalition told (subscription required) the Wall Street Journal.

Will all due respect: Bull. It's more that they would like to see the costs of credit card use flow through to the people who choose to use credit cards, and they want to see people who use cash benefit from that choice. Why should people who pay cash have to pay fees to Visa too? In effect, that is how it works under the current system.

The proposal offered by Durbin and Bond is good for consumers and bad for the financial services industry. I wonder who will win this battle. I'll give you a hint: Don't look for signs offering a "Pay with cash discount!" anytime soon.